JERUSALEM 
In a stunning reversal, Prime Minister Benjamin Netanyahu called off early elections Tuesday after reaching an agreement to bring the main opposition party into the government, a move that puts a more moderate face on his hawkish coalition.

The deal to include the centrist Kadima Party, announced just a day after Netanyahu set early elections in motion, could have implications for a possible Israeli strike on Iran's nuclear facilities and help Netanyahu fend off challenges over an array of issues from partners in his current coalition.

President Shimon Peres' office confirmed media reports early Tuesday that Netanyahu had struck an agreement with Kadima, parliament's largest party. There was no comment from Netanyahu, who had announced Monday that he would seek to move up national elections to Sept. 4, more than a year ahead of schedule.

Netanyahu's current governing coalition has been dominated by religious and nationalist partners that failed to seriously engage the Palestinians. The coalition has also been criticized for promoting a series of bills that appeared to stifle dissent by targeting dovish groups critical of government policy.

Kadima had resisted joining the government when former Foreign Minister Tzipi Livni was at the party's helm, because she did not think Netanyahu was serious about reaching a peace deal with the Palestinians.

But Livni, who had been chief peace negotiator under the preceding Kadima-led government, recently lost her bid to remain party leader to Shaul Mofaz, a former military chief and defense minister who will become deputy prime minister under the new coalition agreement.

Last week, she quit the party, whose fortunes flagged under her leadership and have not revived since Mofaz took over, according to the latest polls. The surveys predicted the party would drop to about a dozen seats in parliament, compared to its current 28.

Mofaz, too, has accused Netanyahu of not seeking a peace deal forcefully enough, and has also been a vocal critic of any unilateral Israeli military attack on Iran's nuclear sites.

With Kadima in the government, Netanyahu could have broader backing to make concessions to the Palestinians and face added pressure to show restraint on Iran, though Mofaz has a history of flip-flopping.

Israel, like the West, thinks Iran is developing nuclear weapons, a charge Tehran denies. But Israel repeatedly has hinted it might strike Iran if it concludes U.S.-led diplomacy and sanctions have failed.

Netanyahu has hinted at the possibility of an Israeli military strike on Iran's nuclear facilities and has repeatedly insisted on Israel's sovereign right to act if it feels threatened. He has not, however, made an open threat.

Israel considers Iran a threat to its survival because of its nuclear and missile development programs, frequent references to Israel's destruction by Iranian leaders, and Tehran's support of violent anti-Israeli groups in Lebanon and Gaza.

Reports of Netanyahu's agreement to bring Kadima into his government emerged shortly after Israel's parliament held debates long into the night over whether to break up.

The agreement stabilizes a coalition that had frayed over domestic issues such as drafting the ultra-Orthodox into the military and tearing down illegally built structures in West Bank settlements. With Kadima in, Netanyahu's government will encompass 94 of parliament's 120 lawmakers.